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Financial report summary
?Risks
- Adverse economic or other conditions in the markets in which we do business could negatively affect our occupancy levels and rental rates and therefore our operating results.
- If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected.
- Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flow.
- Legal disputes, settlement and defense costs could have an adverse effect on our operating results.
- Our tenant reinsurance business is subject to significant governmental regulation, which may adversely affect our results.
- Environmental compliance costs and liabilities associated with operating our stores may adversely affect our results of operations.
- Costs associated with complying with the Americans with Disabilities Act of 1990 may result in unanticipated expenses.
- We face continuing risks and costs in connection with integrating the Life Storage business following our business combination with Life Storage, Inc. (“Life Storage”) in July 2023, and we may not be able to successfully realize the synergies and other benefits of the acquisition or do so within the anticipated time frame.
- There is significant competition among self-storage operators and from other storage alternatives.
- We may not be successful in identifying and consummating suitable acquisitions that meet our criteria, which may impede our growth.
- We and our vendors rely on information technology, and any material failure, inadequacy, interruption or security incident affecting that technology could harm our business, results of operations and financial condition.
- Actual or perceived failures to comply with laws and regulations relating to data privacy and protection, could adversely affect our business, results of operations, and our financial condition.
- Our property taxes could increase due to reassessment or property tax rate changes.
- Public health emergencies, and measures intended to prevent the spread of a public health emergency, could adversely affect our results of operations.
- Climate change may adversely affect our results of operations.
- Conflicts of interest could arise as a result of our relationship with our Operating Partnership.
- Our joint venture investments could be adversely affected by our lack of sole decision-making authority.
- Certain provisions of Maryland law and our organizational documents, including the stock ownership limit imposed by our charter, may inhibit market activity in our stock and could prevent or delay a change in control transaction.
- Our board of directors has the power to issue additional shares of our stock in a manner that may not be in the best interest of our stockholders.
- Our rights and the rights of our stockholders to take action against our directors and officers are limited.
- Disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.
- Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our stores or to pay the distributions currently contemplated or necessary to maintain our qualification as a REIT and may expose us to the risk of default under our debt obligations.
- Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness and make cash distributions to our stockholders.
- Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
- Our existing indebtedness contains covenants that limit our operating flexibility and failure to comply with all covenants in our debt agreements could materially and adversely affect us.
- A downgrade in our credit ratings could materially adversely affect our business and financial condition and the market value of our outstanding notes.
- Dividends payable by REITs may be taxed at higher rates.
- Possible legislative or other actions affecting REITs could adversely affect our stockholders.
- Our failure to qualify as a REIT would have significant adverse consequences to us and the value of our stock.
- We will pay some taxes, reducing cash available for stockholders.
Management Discussion
- Results for the year ended December 31, 2023 included the operations of 2,377 stores (1,903 wholly-owned, two in a consolidated joint venture, and 472 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2022, which included the operations of 1,451 stores (1,132 wholly-owned, one in a consolidated joint venture, and 318 in joint ventures accounted for using the equity method). Material or unusual changes in the results of our operations are discussed below.
- Property Rental—The increase in property rental revenues for the year ended December 31, 2023 was primarily the result of an increase of $507,054 associated with our merger with Life Storage on July 20, 2023, (the "Life Storage Merger" or "Merger") and other acquisitions completed in 2023. We acquired 757 wholly-owned stores in the Merger and an additional 14 stores during the year ended December 31, 2023. We acquired 153 stores during the year ended December 31, 2022. In addition to the increase attributable to the Merger, property rental revenues increased by $46,712 due to operating results at our stabilized stores and increased by $7,523 as a result of increases in occupancy at our lease-up stores.
- Tenant Reinsurance—The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 3,714 stores at December 31, 2023, compared to 2,338 stores at December 31, 2022.